From the Blog: Why Does the IRS Always Miss My Birthday?

Have you ever had this happen? While preparing the final calculations for your donor, the numbers turn out just a little differently than those you provided in a preliminary illustration. The difference is not substantial. In fact, the deduction is a little larger, so it’s good news. Still, you wonder why. After all, numbers don’t lie. Right?

The discrepancy is probably due to the difference between “actuarial age” and actual age, or it could be the historic life expectancy assumptions used for planned gift calculations. First, let’s tackle actual versus actuarial age.

Read the blog post . . .

Things We Are Following:

CRAT Scheme Makes IRS “Dirty Dozen” List

A tax avoidance scheme involving charitable remainder annuity trusts (CRATs) has been included in the IRS’s “Dirty Dozen” list of tax scams for 2024. It works like this. The taxpayer donates appreciated property to a CRAT and wrongly claims that this transaction results in a step-up in cost basis of the property to fair market value. The CRAT then sells the property and uses the proceeds to buy a single-premium immediate annuity to cover the CRAT payments. Following the four tiers of income rules, the beneficiary reports only a small portion of the payments as income. The rest is purported to be a tax-free return of principal. In fact, the beneficiary should report as capital gain income the portion of this tax-free amount attributable to appreciation in the donated property.

Also included on the IRS’s list are promoters who sell artwork at “discounted” prices and encourage the purchasers to wait at least one year, then donate the artwork and claim a deduction based on an inflated valuation.

FASB Liability Calculations – PG Calc’s Got You Covered!

If your organization’s fiscal year ends on June 30, somebody is likely responsible for calculating updated FASB liabilities. With any life income gift arrangement, the sponsoring charity or trustee is obligated to estimate the total future payments based on life expectancy. This set of calculations is sometimes done more often, but at minimum, it must be done annually at the conclusion of each fiscal year.

PG Calc offers a number of solutions to this annual requirement. If you are a licensed user of PGM Anywhere, we can show you how to run a calculation for each gift, one at a time. These calculations are limited to using the 2010CM mortality table, but in some cases, they will be sufficient.

If you are a licensed user of PG Calc’s GiftWrap software, you can run FASB calculations on an entire planned giving program in one fell swoop, assuming all of the data is already in the database. This functionality allows for use of several different mortality tables, and PG Calc’s Client Services team is ready to explain the differences.

At the far end of the spectrum, PG Calc can run your FASB liability calculations FOR YOU as a service. This service allows you to specify both the mortality table AND the annual interest rate. There is a surprisingly modest charge for these services, and we do all of the heavy lifting!

If you are interested in discussing any of these options, please call us at 888-474-2252 or send an email to support@pgcalc.com.

Gifts from Inherited IRAs

A donor who inherits an IRA also inherits the ability to use the IRA to make qualified charitable distributions (QCDs), along with the limitations of this gift type.

To make a QCD contribution to charity, the beneficiary of the inherited IRA must be at least age 70 ½ at the time of the QCD. The age of the IRA’s original owner is not relevant, nor is the inheritor’s age at the time of the decedent’s death. The age that matters is that of the donor at the time they make the gift.

Read the Article in the PG Calc Knowledge Base . . .

Fundamentals of Planned Giving Webinar Series Starts July 9

PG Calc Senior Advisor Craig Wruck is offering his popular Fundamentals of Planned Giving course again this year. A nationally-renowned leader in planned giving for over 40 years, Craig is admired far and wide for his deep understanding of gift planning and his extraordinary skill at conveying planned giving concepts to groups large and small.

Craig’s 4-session course will give you and your colleagues the skills to recognize a planned giving prospect and the confidence to start a planned giving conversation when you do. Topics include:

• The fundamentals of federal taxes.
• The different assets donors can give to charity.
• The common gift planning techniques donors use to meet their financial and philanthropic goals.

All sessions are 1:00 pm – 2:30 pm Eastern Time. Each live session will include 60 minutes of formal presentation, plus 30 minutes to ask Craig questions.

• Tuesday 7/9/2024 Tax Fundamentals
• Tuesday 7/16/2024 Basic Planned Giving Methods
• Tuesday 7/23/2024 Assets Used for Charitable Contributions
• Tuesday 7/30/2024 Advanced Planned Giving Methods

Learn more and register here.

Summer Is the Perfect Time to Start Planning Fall Mailings That Include Personalized Gift Calculations

Every year, our BatchCalcs service helps charities engage with thousands of gift annuity donors and prospects in a more personal way. Fall is our busiest time of year for BatchCalcs. Summer is the perfect time to plan a fall gift annuity mailing enhanced with BatchCalcs.

What is BatchCalcs? BatchCalcs is PG Calc’s service that lets you include personalized gift annuity calculations in each email message or printed letter you send in a mailing. Some clients include just the annuity rate the prospect would get, given their age. Others enclose a Summary of Benefits chart that shows the charitable deduction, annuity amount, and taxation of the annuity if the prospect were to give a specified amount.

All we need from you is an Excel file with a birthdate or age and an ID for each prospect. You can specify the gift amount for each prospect, too. You get back your Excel file with calculated values added and, if you wish, a file of letters or Summary of Benefits charts with values merged into them.

If you want to use BatchCalcs to personalize your gift annuity mailing or just want to learn more about it, go here or contact Dave or Emi at info@pgcalc.com or call 888-497-4970.

Join us in Boston August 14-15!

Planning a trip to Boston this summer? Whether you hope to catch the Red Sox at Fenway Park or stroll the Harbor Walk while eating a lobster roll, PG Calc’s in-person gift planning training is the perfect complement to your summer plans. Over two days, we’ll use PGM Anywhere as our laboratory to build a series of gift proposals that attendees can use as a reference deck for future gift solicitations.

Aug. 14 – Day One – Gift Planning with PGM Anywhere: Introductory

First, we’ll unpack the variables used in creating an immediate payment charitable gift annuity, from actuarial age, to IRS discount rate, to gift annuity rates. We’ll calculate deductions and taxation of payments for cash and illiquid assets, for both one and two life annuities. The class will explore the full functionality of PGM Anywhere by creating proposal letters, annuity contracts, acknowledgement letters, discount rate election forms, and the federally mandated disclosure statement, directly from the software. From that base, we’ll explore QCD gift annuities, deferred gift annuities and flexible gift annuities with various funding types.

Aug. 15 – Day Two – Gift Planning with PGM Anywhere: Advanced

Our second day is a deep dive into the world of charitable trusts. We’ll create proposals for trusts that run for terms, lives, and a combination of life and a term of years. We’ll move on to flip trusts designed to minimize income until retirement, or to take in illiquid assets. We’ll cover how to illustrate future cash flow and payment taxation from a trust, and to adjust investment criteria. With this foundation, we’ll pivot to charitable lead trusts and discuss gift tax issues. The day will conclude with retained life estates.

On both days we’ll finish at 4:00 pm, allowing plenty of time for attendees to explore the city of Boston.

For more information about both trainings and to register, please visit our website.

From Questions about Tax Law to Flip NIMCRUTs, Fred Rogers from Hamilton College Appreciates PG Calc’s Experts

“PG Calc has been my go-to source for technical information. I do believe the client services team — all of them — are well familiar with my plaintive cries for help. They are uniformly well-informed and perhaps most important, patient and indulgent of me when I reach out with questions. They have walked me through the intricacies of PGM Anywhere calculations, and they are equally helpful with my one-off questions about tax law or what in the world is a Flip NIMCRUT.”

-- Fred Rogers
Former Director of Gift Planning
Hamilton College

Congratulations on your retirement, Fred, and kudos on a remarkable career in gift planning!

Learn more about Hamilton College.

Learn about PG Calc’s Client Services.